Sunday, April 12, 2015

All Around the World

"Mexican manufacturing doesn't harm US workers"

It's a simple enough statement; designed to be a debunking of a common myth that Americans hold about Mexico. It's been a bone of contention for some time, generally split down ideological lines, as part of the growing tension over globalism. I found it in a BBC "Viewpoint" piece penned by the Council on Foreign Relations' Shannon O'Neil. In the end, though, it was unconvincing, mainly because in the end, the defense of it that Ms. O'Neil puts forward somewhat misstates the concerns that people have.

It isn't that globalization doesn't lead some jobs to foreign lands. It does. But by expanding abroad, companies become more competitive, supporting and creating jobs at home.
A study by two Harvard business professors and a University of Michigan colleague shows that for every 10 people hired overseas by American corporations, two new jobs are created in the United States.
I don't think that Americans are so uncharitable or paranoid as to feel that the very fact that someone in Mexico has a job is a threat to them. They're concerned because they don't understand American companies to be expanding operations into Mexico - they understand companies to be moving operations, and the work that makes them possible, to Mexico. If a corporation creates 10 new jobs overseas, which in turn creates two new jobs here, you could make the case that one of the Americans who didn't get a job because it was created in Mexico was harmed by that fact, but it will be a somewhat tenuous argument for many, as the understanding of harm has to become fairly broad. But when 10 jobs move from the United States to Mexico, while two replacements are created here, it's a net loss of 8 jobs, and people are likely to see the persons who jobs have been moved as having been directly harmed in the bargain. And this doesn't account for the fact that two new domestic jobs are likely to require different skills than those that moved.

In my own experience, what many Americans are concerned about is being caught in a race to the bottom with the world's poor, where the cost of being unwilling to work for third-world poverty wages is having no wages at all. Casting them as fearing harm from globalization leading some jobs to foreign lands rather than to their doorstep mischaracterizes both their worries and themselves.

Generally speaking, it's difficult to make the point that changes in the employment market driven by globalization are a good thing for the "high-wage" workers who find themselves being undercut by workers in nations with favorable exchange rates, lower standards of living, or both. (Note however that globalization being driven by the employment market can be viewed as a cause for celebration.)

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